OCBC keeps a Hold rating on Hyflux (600.SG), but says value is starting to emerge after the stock's recent sharp correction.
The house notes that Starhill shares fell nearly 13.1% from a high of $1.37 on 10 Jun to a low of $1.19 on 24 Jun, with the slowing economic growth and tight liquidity conditions in China hurting investor confidence.
Still, OCBC believes these concerns may be overwrought; although waste water treatment projects require very large capital investments, "water scarcity and pollution of water sources are two of the most serious problems for China; and the government is likely to put in more effort to tackle these issues," the house says.
Also, the house notes that Hyflux is an "international" company, thus it should be able to access other sources of funds besides the usual "local" project financing.
The house trims the stock's fair value to $1.30 from $1.44. Hyflux shares are recently up 0.8% at $1.25.
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